Exhibit 10.3


 


MANAGEMENT SERVICES AGREEMENT


 


MANAGEMENT
SERVICES AGREEMENT, dated as of May 14, 1999 between KPS Management, LLC, a
Delaware limited liability company (“KPS”) and Blue Ridge Paper Products Inc.,
a Delaware corporation (the “Company”).


 


W  I  T  N  E  S
S  E  T  H:


 


WHEREAS, the
Company desires that KPS provide it with certain ongoing advisory and
management services, and KPS desires to render such services to the Company, on
the terms and conditions set forth in this Agreement.


 


WHEREAS, the
Company is the wholly owned subsidiary of Blue Ridge Holding Corp., a Delaware
corporation (“Holdings”).


 


NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, the parties hereto agree as follows:


 


SECTION 1.                                Services.


 


During the
term of this Agreement, KPS shall provide such advisory and management services
to the Company and its subsidiaries as the Board of Directors of the Company
shall reasonably request.  Such services
may be performed at KPS’s offices.


 


SECTION 2.                                Compensation.


 


In
consideration of the services to be provided in accordance with Section 1,
the Company shall pay KPS a management fee by wire transfer in immediately
available funds within 30 days of the end of each fiscal quarter of the
Company, in an amount equal to one-half of one percent (0.5%) of the
consolidated gross revenues of Holdings for such fiscal quarter then ended; provided,
however that in no event shall the sum of such quarterly payments in any
fiscal year exceed $3,000,000.  On the
date hereof, the Company shall pay KPS by wire transfer of immediately
available funds an amount equal to $500,000, which shall be credited against
the quarterly management fee payments described above.


 


SECTION 3.                                Indemnification.


 


(a)                                  None
of KPS, any of its affiliates or any of their respective partners, officers,
directors, stockholders, agents or employees (and provided pursuant to this
Agreement), except as may result from such Indemnified Party’s gross negligence
or willful misconduct.


 


(b)                                 To
the fullest extent permitted by law, the Company shall indemnify and hold
harmless each Indemnified Party from and against any losses, claims, damages,
actions, demands, deficiencies, judgments or causes of action or liabilities,
including without limitation, reasonable legal fees or other expenses incurred
in investigating or defending


 

















 


against any such losses,
claims, damages or liabilities based upon, arising out of or otherwise in
respect of this Agreement.  The
provisions of this Section 3 shall survive the termination of this
Agreement.


 


SECTION 4.                                Reimbursement.


 


The Company
shall promptly, upon request, reimburse KPS and its affiliates for all
reasonable costs and expenses (including travel) incurred in connection with
the performance of this Agreement.


 


SECTION 5.                                Assignment.


 


This Agreement
may not be assigned by any party hereto without the written consent of the
other party; provided, that KPS shall be entitled to assign this Agreement to
any Person that is an affiliate of KPS or that otherwise assumes or is a successor
to substantially all of the assets and liabilities of KPS.


 


SECTION 6.                                Termination.


 


This Agreement
may be terminated by KPS at any time by written notice to the Company.  In addition, this Agreement shall terminate
automatically upon the first to occur of the (i) tenth anniversary of this
Agreement and (ii) end of the fiscal year in which KPS Special Situations Fund,
L.P. and KPS Supplemental Fund L.P., collectively, cease to own at least 10% of
the outstanding common stock of Holdings. 
The provisions of Section 3 shall survive the termination of this
Agreement.


 


SECTION 7.                                Notices.


 


All notices,
requests, demands and other communications provided for by this Agreement shall
be in writing and shall be deemed to have been given three Business Days after
mailed when mailed by registered or certified mail, return receipt requested,
or given by telecopy or other electronic means, or when delivered if given in
person, to the following addresses of the parties hereto or to such other
address as such party may have specified for notice:


 


(a)                                  KPS:


 


Management,
LLC

200 Park Avenue

58th Floor

New York, NY  10166

Attn:                    Eugene
Keilin


 


(b)                                 The
Company:


 


Blue Ridge
Paper Products Inc.

Main Street

Canton, NC  28716

Attn:                    Gordon
Jones


 


2

















 


SECTION 8.                                Modification.


 


This Agreement
may not be modified or amended in any manner other than by an instrument in
writing signed by both parties hereto, or their respective successors or
assigns.


 


SECTION 9.                                Entire
Agreement.


 


This Agreement
constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes any prior agreement or understanding among
them with respect to such subject matter.


 


SECTION 10.                          Severability.


 


If any
provision of this Agreement, or the application of such provision to any Person
or circumstance, shall be held invalid, the remainder of this Agreement or the
application of such provision to other Persons or circumstances shall not be
affected thereby.


 


SECTION 11.                          Governing
Law; Submission to Jurisdiction.


 


THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES
OR RULE OF SUCH STATE.


 


SECTION 12.                          Successors
and Assigns.


 


Except as
herein otherwise specifically provided, this Agreement shall be binding upon
and inure to the benefit of the parties and their legal representatives heirs,
administrators, executors, successors and assigns.


 


SECTION 13.                          Counterparts.


 


This Agreement
may be executed in several counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same instrument.  It shall not be necessary for all parties to
execute the same counterpart hereof.


 


SECTION 14.                          Headings.


 


Captions
contained in this Agreement are inserted only as a matter of convenience and in
no way define, limit or extend the scope or intent of this Agreement or any
provision hereof.


 


SECTION 15.                          Interpretation.


 


Wherever from
the context it appears appropriate, each term stated in either the singular or
the plural shall include the singular and the plural, and pronouns stated in
the masculine, the feminine or neuter gender shall include the masculine, the
feminine and the neuter.


 


3

















 


SECTION 16.                          Waivers.


 


No provision
of this Agreement shall be deemed to have been waived unless such waiver is in
writing and signed by or on behalf of the party granting the waiver.


 


4

















 


IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed by their
representatives thereunto duly authorized as of the day and year first above
written.


 


	
   

  	
  KPS MANAGEMENT, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  David Shapiro

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David P. Shapiro

  
	
   

  	
   

  	
  Title:

  	
  Principal

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BLUE RIDGE PAPER PRODUCTS INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Gordon Jones

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gordon Jones

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
					



 


5